In the current American Thinking, I have an article[1] raising questions about the wisdom of our current policies for our financial infrastructure and compare with the inefficiencies, political favoritism and pork barrel spending on "internal improvements" such as our federal highway system. I concluded:

More broadly, we should take a step back and re-examine the road we're on with federal "internal improvements" for our financial infrastructure, too. With the federal government's use of the Federal Reserve, and Fannie and Freddie, to pave our financial paths, we need to see the continued political favoritism, inefficiencies and wasteful spending.

Something to ponder while stuck in rush-hour traffic, realizing that your financial situation has probably deteriorating 40%, in large part thanks to the popped housing bubble[2].

We've been playing this game for 200 years but don't seem willing to learn the lessons of this history. I'm sure throwing more dollars to study this question would give us more insight, right? <sarcasm>

As early Presidents (such as Madison and others) noted - whether a good or a bad idea (and I believe them to be a bad idea) Federal government financed "internal improvements" (with the exception of "post roads" - although the Congress does not have to do build them if it does not wish to do so) are UNCONSTITUTIONAL.

The words "common defence and general welfare" (in the preamble and at the start of Article One Section Eight) are the PURPOSE of the specific powers then listed - there is no general ("catch all") "general welfare spending power" - such a power would make listing specific spending powers (such as "post roads") pointless - and it would make the Tenth Amendment to the Consititution meaningless.

For those people who want a national government that engages in "internal improvements" (over and on top of post roads) I suggest the CONFEDERATE Constitution - which allows the government to do such things.

However, I prefer the view of government power of Thomas Jefferson over that of Jefferson Davis.

As for the Federal Reserve - and the government backed "private entities" Fannie Mae and Freddie Mac.

OF COURSE they are unconstitutional. The Constitution gives the Congress the power to "coin money" (if the Congress wishes to do so), not to print money (that would lead to the "not worth a Continental" of the Continental Congress one of the basic problems the Constitution was supposed to deal with). Still less to set up "private" entities to do so.

The idea of a American Central Bank (which is what the Fed basically is) is utterly unconstitutional - as well as highly harmful.

By the way Andrew Jackson's idea of handing Federal tax money to State "pet banks" is also wrong headed (the "pet banks" promptly build an inverted pyramid credit bubble with the money).

Martin Van Buren (himself a man with great experence of banking) was correct.

There should be no connection between government and banking - period.

The Federal government should take in revenue in taxes (paid in gold or silver) and spend the money on Constitutional spending alone. REAL "pay as you go".